Ring Energy Announces Second Quarter and Six Month 2018 Financial and Operational Results

Dateline:

Public Company Information:

NYSEAM:

REI

MIDLAND, Texas--(BUSINESS WIRE)--Ring Energy, Inc. (NYSE American: REI) (“Ring”) (“Company”) announced
today financial results for the three months and six months ended June
30, 2018. For the three month period ended June 30, 2018, Ring reported
oil and gas revenues of $29,924,883, compared to revenues of $14,503,309
for the quarter ended June 30, 2017. For the six months ended June 30,
2018, the Company reported oil and gas revenues of $59,816,274, compared
to $26,747,102 for the six months ended June 30, 2017.

For the three months ended June 30, 2018, Ring reported net income of
$4,719,806, or $0.08 per diluted share. For the six months ended June
30, 2018, the Company reported net income of $10,385,440, or $0.17 per
diluted share. This compares to net income of $1,910,763, or $0.04 per
fully diluted share for the three months ended June 30, 2017, and net
income of $3,190,044, or $0.06 per fully diluted share for the six month
period ended June 30, 2017.

For the three months ended June 30, 2018, the net income included a
pre-tax “Unrealized Loss on Derivatives” of $1,099,273. Excluding this
item, the net income per diluted share would have been $0.09. For the
six months ended June 30, 2018, the net income included a pre-tax
“Unrealized Loss on Derivatives” of $1,889,974. Excluding this item, the
net income per diluted share would have been $0.20.

For the three months ended June 30, 2018, oil sales volume increased to
469,446 barrels, compared to 306,402 barrels for the same period in
2017, a 53.2% increase, and gas sales volume increased to 319,056 MCF
(thousand cubic feet), compared to 190,044 MCF for the same period in
2017, a 67.8% increase. On a barrel of oil equivalent (“BOE”) basis for
the three months ended June 30, 2018, production sales increased to
522,622 BOEs, compared to 338,076 BOEs for the same period in 2017, a
54.5% increase, and 514,869 BOEs for the first quarter of 2018, a 1.5%
increase. For the six months ended June 30, 2018, oil sales volume
increased to 949,310 barrels, compared to 546,662 barrels for the same
period in 2017, a 73.6% increase, and gas sales volume increased to
529,087 MCF, compared to 358,393 MCF for the same period in 2017, a
47.6% increase. On a BOE basis for the six months ended June 30, 2018,
production sales increased to 1,037,491 BOEs, compared to 606,394 BOEs
for the same period in 2017, a 71.1% increase.

The average commodity prices received by the Company were $61.70 per
barrel of oil and $3.02 per MCF of natural gas for the quarter ended
June 30, 2018, compared to $45.34 per barrel of oil and $3.22 per MCF of
natural gas for the quarter ended June 30, 2017. The average prices
received for the six months ended June 30, 2018 were $61.21 per barrel
of oil and $3.24 per MCF of natural gas, compared to $46.81 per barrel
of oil and $3.23 per MCF of natural gas for the six month period ended
June 30, 2017.

Lease operating expenses, including production taxes, for the three
months ended June 30, 2018 were $15.43 per BOE, a 24% increase from the
prior year. Depreciation, depletion and amortization costs, including
accretion, increased 13.5% to $17.82 per BOE. General and administrative
costs, which included a $1,002,348 charge for stock based compensation,
were $6.03 per BOE, a 14% decrease. For the six months ended June 30,
2018, lease operating expenses, including production taxes, were $14.72
per BOE, a 19% increase. Depreciation, depletion and amortization costs,
including accretion, were $17.32 per BOE, a 17.7% increase, and general
and administrative costs, which included a $2,083,547 charge for stock
based compensation, were $6.01 per BOE, a 30% decrease.

Cash provided by operating activities, before changes in working
capital, for the three and six months ended June 30, 2018 was
$17,389,257, or $0.28 per fully diluted share, and $36,557,519, or $0.61
per fully diluted share, compared to $8,791,004 and $16,012,940, or
$0.17 and $0.32 per fully diluted share for the same periods in 2017.
Earnings before interest, taxes, depletion and other non-cash items
(“Adjusted EBITDA”) for the three and six months ended June 30, 2018 was
$17,306,266, or $0.28 per fully diluted share, and $36,510,058, or $0.61
per fully diluted share, compared to $8,743,693 and $15,848,950, or
$0.17 and $0.31 in 2017. (See accompanying table for a reconciliation of
net income to adjusted EBITDA).

On June 20, 2018, the Company announced it had increased the borrowing
base on its $500 million senior secured credit facility from $60 million
to $175 million. There was no outstanding debt on the Company’s $500
million senior secured credit facility at June 30, 2018.

Mr. Kelly Hoffman, the Company’s Chief Executive Officer, commented, “We
resolved a couple of minor drilling and production delays early in the
quarter and have seen our production continue to grow, exceeding 6,600
BOEs per day by the end of June. With the continued success of our
horizontal drilling and development program and the positive results
from both the North Gaines and Brushy Canyon wells, that growth will not
only continue but accelerate, moving us closer to our goal of cash flow
positive by the end of the year. We continue to see many acquisition
opportunities in both the Central Basin Platform and Delaware Basin. We
have increased our borrowing base to $175 million on our senior secured
credit facility and will continue to look for opportunities that will be
immediately accretive to the Company and its shareholders.”

Non-GAAP Financial Measures:

Net income for the three months ended June 30, 2018 includes a non-cash
charge for stock based compensation of $1,002,348. Net income for the
six months ended June 30, 2018 includes a non-cash charge for stock
based compensation of $2,083,547. Excluding such items, the Company’s
net loss would have been $0.09 per diluted share for the three months
ended June 30, 2018, and net earnings of $0.20 for the six months ended
June 30, 2018. The Company believes results excluding these items are
more comparable to estimates provided by security analysts and,
therefore, are useful in evaluating operational trends of the Company
and its performance, compared to other similarly situated oil and gas
producing companies.

About Ring Energy, Inc.

Ring Energy, Inc. is an oil and gas exploration, development and
production company with current operations in Texas.www.ringenergy.com

Safe Harbor Statement

This release contains forward-looking statements within the meaning of
the “safe-harbor” provisions of the Private Securities Litigation Reform
Act of 1995 that involve a wide variety of risks and uncertainties,
including, without limitations, statements with respect to the Company’s
strategy and prospects. Such statements are subject to certain risks and
uncertainties which are disclosed in the Company’s reports filed with
the SEC, including its Form 10-K for the fiscal year ended December 31,
2017, its Form 10-Q for the quarter ended June 30, 2018 and its other
filings with the SEC. Readers and investors are cautioned that the
Company’s actual results may differ materially from those described in
the forward-looking statements due to a number of factors, including,
but not limited to, the Company’s ability to acquire productive oil
and/or gas properties or to successfully drill and complete oil and/or
gas wells on such properties, general economic conditions both
domestically and abroad, and the conduct of business by the Company, and
other factors that may be more fully described in additional documents
set forth by the Company.

Capitalized expenditures attributable to drilling projects
financed through current liabilities

19,000,000

8,000,000

RECONCILIATION OF CASH FLOW FROM OPERATIONS

Net cash provided by operating activities

$

33,277,813

$

18,121,648

Change in operating assets and liabilities

3,279,706

(2,108,708

)

Cash flow from operations

$

36,557,519

$

16,012,940

Management believes that the non-GAAP measure of cash flow from
operations is useful information for investors because it is used
internally and is accepted by the investment community as a means of
measuring the Company's ability to fund its capital program. It is
also used by professional research analysts in providing investment
recommendations pertaining to companies in the oil and gas
exploration and production industry.

Search Investors

Investor Resources

Footer

Ring Energy, Inc. (NYSE American: REI) is a Texas-based oil and gas exploration, development and production company with current operations in the Permian Basin of West Texas recognized as the top producing oil basin in North America.